BILL NUMBER: AB 2284	CHAPTERED  09/26/00

	CHAPTER   636
	FILED WITH SECRETARY OF STATE   SEPTEMBER 26, 2000
	APPROVED BY GOVERNOR   SEPTEMBER 24, 2000
	PASSED THE ASSEMBLY   AUGUST 31, 2000
	PASSED THE SENATE   AUGUST 30, 2000
	AMENDED IN SENATE   AUGUST 25, 2000
	AMENDED IN SENATE   AUGUST 21, 2000
	AMENDED IN SENATE   JULY 6, 2000
	AMENDED IN SENATE   JUNE 27, 2000
	AMENDED IN SENATE   JUNE 21, 2000
	AMENDED IN SENATE   JUNE 13, 2000
	AMENDED IN ASSEMBLY   APRIL 26, 2000

INTRODUCED BY   Assembly Member Dutra

                        FEBRUARY 24, 2000

   An act to amend Sections 10229, 10232.2, 10232.25, and 10232.5 of
the Business and Professions Code, to amend Sections 1363, 2924,
2924g, and 2943 of the Civil Code, and to amend Sections 17312 and
17320 of the Financial Code, relating to real estate.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 2284, Dutra.  Mortgages:  escrow companies.
   (1) The Real Estate Law requires a real estate broker to file
certain information with the Real Estate Commissioner relative to the
conducting of a transaction that involves the sale of or offer to
sell a series of notes secured directly by an interest in real
property, or the sale of undivided interests in a note secured
directly by real property equivalent to a series transaction,
otherwise known as a multilender transaction, as specified.  Existing
law provides that a violation of the Real Estate Law is a crime.
   This bill would expand the nature of the information that is
required to be filed with the commissioner in this regard.  Because a
violation of the bill's requirements would be a crime, this bill
would impose a state-mandated local program by expanding the
definition of a crime.
   (2) The Real Estate Law requires a real estate broker engaging in
certain mortgage-related activities to report certain information to
the Department of Real Estate, and authorizes the department to
conduct a trust fund examination of a broker who fails to submit the
required information.  The department may charge a broker an amount
equal to 1.5 times the cost of the examination and other related
activities.
   This bill would authorize the commissioner to suspend a broker's
license, or deny renewal of a broker's license, if the broker fails
to pay the amount charged for this purpose, as specified.  This bill
would enact other related provisions.
   (3) Existing law regulates common interest developments, providing
for, among other things, that they shall be managed by a board of
directors and how the board's meetings shall be conducted.  Existing
law provides that the board of directors shall meet in executive
session if so requested by a member being disciplined, and that the
member shall be entitled to attend the executive session.
   This bill would require that when the board of directors of a
common interest development association is to meet to consider or
impose discipline upon a member, the board shall provide the member a
written notification, as specified, at least 10 days prior to the
meeting.  This notification would state, among other things, that the
member has a right to attend the meeting and address the board.
This bill would also provide that, if the board imposes discipline on
a member, the board shall provide the member a written notification
of the disciplinary action within 15 days following the action, and
that a disciplinary action shall not be effective without fulfilling
specified requirements.
   (4) Existing law provides for the use of a mortgage or a deed of
trust as security in a transfer of real property, provides for a
power of sale upon a breach of the obligation that a mortgage or a
deed of trust secures, and establishes certain procedures that a
mortgagee or trustee must follow when exercising a power of sale.
   This bill would provide that a trustee is not subject to
procedures regulating the practice of debt collection in connection
with the performance of required procedures.
   (5) Existing law provides that a sale of property pursuant to a
power of sale under a mortgage or deed of trust may be postponed and
establishes procedures for giving notice of the postponement and
setting a new date of sale, among other things.  Existing law also
provides that, after specified postponements, a sale described above
shall be conducted no sooner than 7 days after the earlier of
specified events.
   This bill would provide that notwithstanding the above, the sale
shall be conducted no sooner than the expiration of a specified stay
granted under federal bankruptcy law.
   (6) Existing law allows certain parties to a mortgage or deed of
trust to request beneficiary statements or payoff demand statements,
as defined, that contain specified information.
   This bill would provide that preparation and delivery of a
beneficiary statement or a payoff demand statement does not change
the date of sale established pursuant to a power of sale contained in
a deed of trust or mortgage, as specified.
   (7) The Escrow Law generally provides for regulation of escrow
agents by the Department of Corporations.  Existing law provides for
creation of the Fidelity Corporation as a nonprofit mutual benefit
corporation to indemnify escrow agents that are members of the
corporation against loss, as specified, and requires that escrow
agents engaged in specified types of business transactions to be
members of the Fidelity Corporation.  The expenses of the corporation
are paid from various funds, in which are deposited fees and
assessments collected from members.
   This bill would amend the definition of real property escrows for
the purpose of defining a type of business transaction that requires
an escrow agent to be a member of the Fidelity Corporation and would
provide for refunds of a member's membership fee under certain
circumstances and within a specified timeframe.
  (8) The California Constitution requires the state to reimburse
local agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
   This bill would provide that no reimbursement is required by this
act for a specified reason.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 10229 of the Business and Professions Code is
amended to read:
   10229.  Any transaction that involves the sale of or offer to sell
a series of notes secured directly by an interest in the same real
property, or the sale of undivided interests in a note secured
directly by real property equivalent to a series transaction, shall
comply with all of the following, except as provided in paragraph (4)
of subdivision (i), the terms "sale" and "offer to sell," as used in
this section, shall have the same meaning as set forth in Section
25017 of the Corporations Code and include the acts of negotiating
and arranging the transaction:
   (a) A notice in the following form and containing the following
information shall be filed with the commissioner within 30 days after
the first transaction and within 30 days of any material change in
the information required in the notice:


TO:  Real Estate Commissioner
     Mortgage Loan Section
     2201 Broadway
     Sacramento, CA 95818

This notice is filed pursuant to Section 10229 of the Business and
Professions Code.

( ) Original Notice                ( ) Amended Notice

1.  Name of Broker conducting transaction under Section 10229:


___________________________________________________________________


2.  Broker license identification
number:______________________________

3.  List the month the fiscal year
ends:_______________________________

4.  Broker's telephone
number:_________________________________________

5.  Firm name (if different from "1"):


___________________________________________________________________


6.  Street address (main location):


___________________________________________________________________
    # and Street               City           State     ZIP Code


7.  Mailing address (if different from "6"):


___________________________________________________________________


8.  Servicing Agent:  Identify by name, address, and telephone
    number the person or entity who will act as the
    servicing agent in transactions pursuant to Section 10229
    (including the undersigned Broker if that is the case):


___________________________________________________________________

___________________________________________________________________


9.  Total number of multilender notes arranged:
_______________________

10. Total number of interests sold to investors on the
    multilender's
notes:_______________________________________________

11. Inspection of trust account (before answering this question,
review
    the provisions of paragraph (3) of subdivision (j) of Section
    10229).

CHECK ONLY ONE OF THE FOLLOWING:

( )  The undersigned Broker is (or expects to be) required to file
     reports of inspection of its trust account(s) with the Real
     Estate Commissioner pursuant to paragraph (3) of subdivision (j)

     of Section 10229.

Amount of Multilender Payments Collected Last Fiscal
Quarter:
______________________________________________________________

Total Number of Investors Due Payments Last Fiscal
Quarter:____________

( )  The undersigned Broker is NOT (or does NOT expect to be)
required
     to file reports of inspection of its trust account(s) with the
     Real Estate Commissioner pursuant to paragraph (3) of
subdivision
     (j) of Section 10229.

12.  Signature.  The contents of this notice are true and correct.

     _______________
_________________________________________________
          Date                       Type Name of Broker


_________________________________________________
                        Signature of Broker or of Designated Officer
                                     of Corporate Broker


_________________________________________________
                         Type Name of Person(s) Signing This Notice
NOTE:  AN AMENDED NOTICE MUST BE FILED BY THE BROKER WITHIN 30 DAYS
OF ANY MATERIAL CHANGE IN THE INFORMATION REQUIRED TO BE SET FORTH
HEREIN.

   (b) All advertising employed for transactions under this section
shall (1) show the name of the broker and (2) comply with Section
10235 of the Business and Professions Code and Sections 260.302 and
2848 of Title 10 of the California Code of Regulations.  Brokers and
their agents are cautioned that a reference to a prospective investor
that a transaction is conducted under this section may be deemed
misleading or deceptive if this representation may reasonably be
construed by the investor as an implication of merit or approval of
the transaction.
   (c) The real property directly securing the notes or interests is
located in this state, the note or notes are not by their terms
subject to subordination to any subsequently created deed of trust
upon the real property, and the note or notes are not promotional
notes secured by liens on separate parcels of real property in one
subdivision or in contiguous subdivisions.  For purposes of this
subdivision, a promotional note means a promissory note secured by a
trust deed, executed on unimproved real property or executed after
construction of an improvement of the property but before the first
purchase of the property as so improved, or executed as a means of
financing the first purchase of the property as so improved, that is
subordinate, or by its terms may become subordinate, to any other
trust deed on the property.  However, the term "promotional note"
does not include either of the following:
   (1) A note that was executed in excess of three years prior to
being offered for sale.
   (2) A note secured by a first trust deed on real property in a
subdivision that evidences a bona fide loan made in connection with
the financing of the usual cost of the development in a residential,
commercial, or industrial building or buildings on the property under
a written agreement providing for the disbursement of the loan funds
as costs are incurred or in relation to the progress of the work and
providing for title insurance ensuring the priority of the security
as against mechanic's and materialmen's liens or for the final
disbursement of at least 10 percent of the loan funds after the
expiration of the period for the filing of mechanic's and materialmen'
s liens.
   (d) (1) The notes or interests are sold by or through a real
estate broker, as principal or agent.  At the time the interests are
originally sold or assigned, neither the broker nor an affiliate of
the broker shall have an interest as owner, lessor, or developer of
the property securing the loan, or any contractual right to acquire,
lease, or develop the property securing the loan.  This provision
does not prohibit a broker from conducting the following transactions
if, in either case, the disclosure statement furnished by the broker
pursuant to subdivision (k) discloses the interest of the broker or
affiliate in the transaction and the circumstances under which the
broker or affiliate acquired the interest:
   (A) A transaction in which the broker or an affiliate of the
broker is acquiring the property pursuant to a foreclosure under, or
sale pursuant to, a deed of trust securing a note for which the
broker is the servicing agent or that the broker sold to the holder
or holders.
   (B) A transaction in which the broker or an affiliate of the
broker is reselling from inventory property acquired by the broker
pursuant to a foreclosure under, or sale pursuant to, a deed of trust
securing a note for which the broker is the servicing agent or that
the broker sold to the holder or holders.
   (2) For the purposes of this subdivision, the following
definitions apply:
   (A) "Broker" means a person licensed as a broker under this part.

   (B) "Affiliate" means a person controlled by, controlling, or
under common control with, the broker.
   (e) (1) The notes or interests shall not be sold to more than 10
persons, each of whom meets one or both of the qualifications of
income or net worth set forth below and signs a statement, which
shall be retained by the broker for four years, conforming to the
following:


Transaction Identifier: _______________________________________

Name of Purchaser: ________________________  Date: ____________

Check either one of the following, if true:
( ) My investment in the transaction does not exceed 10% of my
    net worth, exclusive of home, furnishings, and automobiles.

( ) My investment in the transaction does not exceed 10% of my
    adjusted gross income for federal income tax purposes for
    my last tax year or, in the alternative, as estimated for
    the current year.

                        _______________________________________
                                       Signature

   (2) The number of offerees shall not be considered for the
purposes of this section.
   (3) A husband and wife and their dependents, and an individual and
his or her dependents, shall be counted as one person.
   (4) A retirement plan, trust, business trust, corporation, or
other entity that is wholly owned by an individual and the individual'
s spouse or the individual's dependents, or any combination thereof,
shall not be counted separately from the individual, but the
investments of these entities shall be aggregated with those of the
individual for the purposes of the statement required by paragraph
(1).  If the investments of any entities are required to be
aggregated under this subdivision, the adjusted gross income or net
worth of these entities may also be aggregated with the net worth,
income, or both, of the individual.
   (5) The "institutional investors" enumerated in subdivision (i) of
Section 25102 or subdivision (c) of Section 25104 of the
Corporations Code, or in a rule adopted pursuant thereto, shall not
be counted.
   (f) The notes or interests of the purchasers shall be identical in
their underlying terms, including the right to direct or require
foreclosure, rights to and rate of interest, and other incidents of
being a lender, and the sale to each purchaser pursuant to this
section shall be upon the same terms, subject to adjustment for the
face or principal amount or percentage interest purchased and for
interest earned or accrued.  This subdivision does not preclude
different selling prices for interests to the extent that these
differences are reasonably related to changes in the market value of
the loan occurring between the sales of these interests.  The
interest of each purchaser shall be recorded.
   (g) (1) Except as provided in paragraph (2), the aggregate
principal amount of the notes or interests sold, together with the
unpaid principal amount of any encumbrances upon the real property
senior thereto, shall not exceed the following percentages of the
current market value of the real property, as determined in writing
by the broker or appraiser pursuant to Section 10232.6, plus the
amount for which the payment of principal and interest in excess of
the percentage of current market value is insured for the benefit of
the holders of the notes or interests by an insurer admitted to do
business in this state by the Insurance Commissioner:


(A)  Single-family residence, owner occupied ..................
80%
(B)  Single-family residence, not owner occupied ..............
75%
(C)  Commercial and income-producing properties ...............
65%
(D)  Single-family residentially zoned lot or parcel which
     has installed offsite improvements including
     drainage, curbs, gutters, sidewalks, paved roads, and
     utilities as mandated by the political subdivision
     having jurisdiction over the lot or parcel ...............
65%
(E)  Land that has been zoned for (and if required,
     approved for subdivision as) commercial or
     residential development ..................................
50%
(F)  Other real property ......................................
35%

   (2) The percentage amounts specified in paragraph (1) may be
exceeded when and to the extent that the broker determines that the
encumbrance of the property in excess of these percentages is
reasonable and prudent considering all relevant factors pertaining to
the real property.  However, in no event shall the aggregate
principal amount of the notes or interests sold, together with the
unpaid principal amount of any encumbrances upon the property senior
thereto, exceed 80 percent of the current fair market value of
improved real property or 50 percent of the current fair market value
of unimproved real property, except in the case of a single-family
zoned lot or parcel as defined in paragraph (1), which shall not
exceed 65 percent of the current fair market value of that lot or
parcel, plus the amount insured as specified in paragraph (1).  A
written statement shall be prepared by the broker that sets forth the
material considerations and facts that the broker relies upon for
his or her determination, which shall be retained as a part of the
broker's record of the transaction.  Either a copy of the statement
or the information contained therein shall be included in the
disclosures required pursuant to subdivision (k).
   (3) A copy of the appraisal or the broker's evaluation shall be
delivered to each purchaser.  The broker shall advise purchasers of
their right to receive a copy.  For purposes of this paragraph,
"appraisal" means a written estimate of value based upon the
assembling, analyzing, and reconciling of facts and value indicators
for the real property in question.  A broker shall not purport to
make an appraisal unless the person so employed is qualified on the
basis of special training, preparation, or experience.
   (h) The documentation of the transaction shall require that (1) a
default upon any interest or note is a default upon all interests or
notes and (2) the holders of more than 50 percent of the record
beneficial interests of the notes or interests may govern the actions
to be taken on behalf of all holders in accordance with Section
2941.9 of the Civil Code in the event of default or foreclosure for
matters that require direction or approval of the holders, including
designation of the broker, servicing agent, or other person acting on
their behalf, and the sale, encumbrance, or lease of real property
owned by the holders resulting from foreclosure or receipt of a deed
in lieu of foreclosure.  The terms called for by this subdivision may
be included in the deed of trust, in the assignment of interests, or
in any other documentation as is necessary or appropriate to make
them binding on the parties.
   (i) (1) The broker shall not accept any purchase or loan funds or
other consideration from a prospective lender or purchaser, or
directly or indirectly cause the funds or other consideration to be
deposited in an escrow or trust account, except as to a specific loan
or note secured by a deed of trust that the broker owns, is
authorized to negotiate, or is unconditionally obligated to buy.
   (2) All funds received by the broker from the purchasers or
lenders shall be handled in accordance with Section 10145 for
disbursement to the persons thereto entitled upon recordation of the
interests of the purchasers or lenders in the note and deed of trust.
  No provision of this section shall be construed as modifying or
superseding applicable law regulating the escrowholder in any
transaction or the handling of the escrow account.
   (3) The books and records of the broker or servicing agent, or
both, shall be maintained in a manner that readily identifies
transactions under this section and the receipt and disbursement of
funds in connection with these transactions.
   (4) If required by paragraph (3) of subdivision (j), the review by
the independent certified public accountant shall include a sample
of transactions, as reflected in the records of the trust account
required pursuant to paragraph (1) of subdivision (j), and the bank
statements and supporting documents.  These documents shall be
reviewed for compliance with this section with respect to the
handling and distribution of funds.  The sample shall be selected at
random by the accountant from all these transactions and shall
consist of the following:  (A) three sales made or 5 percent of the
sales made pursuant to this section during the period for which the
examination is conducted, whichever is greater, and (B) 10 payments
processed or 2 percent of payments processed under this section
during the period for which the examination is conducted, whichever
is greater.  The transaction that constitutes a "sale," for purposes
of this subdivision, is the series of transactions by which a series
of notes of a maker, or the interests in the note of a maker, are
sold or issued to their various purchasers under this section,
including all receipts and disbursements in that process of funds
received from the purchasers or lenders.  The transaction that
constitutes a "payment," for the purposes of this subdivision, is the
receipt of a payment from the person obligated on the note or from
some other person on behalf of the person so obligated, including the
broker or servicing agent, and the distribution of that payment to
the persons entitled thereto.  If a payment involves an advance paid
by the broker or servicing agent as the result of a dishonored check,
the inspection shall identify the source of funds from which the
payment was made or, in the alternative, the steps that are
reasonably necessary to determine that there was not a disbursement
of trust funds.  The accountant shall inspect for compliance with the
following specific provisions of this section:  paragraphs (1), (2),
and (3) of subdivision (i) and paragraphs (1) and (2) of subdivision
(j).
   (5) Within 30 days of the close of the period for which the report
is made, or within any additional time as the commissioner may in
writing allow in a particular case, the accountant shall forward to
the broker or servicing agent, as the case may be, and to the
commissioner, the report of the accountant, stating that the
inspection was performed in accordance with this section, listing the
sales and the payments examined, specifying the nature of the
deficiencies, if any, noted by the accountant with respect to each
sale or payment, together with any further information as the
accountant may wish to include, such as corrective steps taken with
respect to any deficiency so noted, or stating that no deficiencies
were observed.  If the broker meets the threshold criteria of Section
10232, the report of the accountant shall be submitted as part of
the quarterly reports required under Section 10232.25.
   (j) The notes or interests shall be sold subject to a written
agreement that obligates a licensed real estate broker, or a person
exempted from the licensing requirement for real estate brokers under
Chapter 3 (commencing with Section 10130) of Part 1 of Division 4,
to act as agent for the purchasers or lenders to service the note or
notes and deed of trust, including the receipt and transmission of
payments and the institution of foreclosure proceedings in the event
of a default.  A copy of this servicing agreement shall be delivered
to each purchaser.  The broker shall offer to the lenders or
purchasers the services of the broker or one or more affiliates of
the broker, or both, as servicing agent for each transaction
conducted pursuant to this section.  The agreement shall require all
of the following:
   (1) (A) That payments received on the note or notes be deposited
immediately to a trust account maintained in accordance with this
section and with the provisions for trust accounts of licensed real
estate brokers contained in Section 10145 and Article 15 (commencing
with Section 2830.1) of Chapter 6 of Title 10 of the California Code
of Regulations.
   (B) That payments deposited pursuant to subparagraph (A) shall not
be commingled with the assets of the servicing agent or used for any
transaction other than the transaction for which the funds are
received.
   (2) That payments received on the note or notes shall be
transmitted to the purchasers or lenders pro rata according to their
respective interests within 25 days after receipt thereof by the
agent.  If the source for the payment is not the maker of the note,
the agent shall inform the purchasers or lenders of the source for
payment.  A broker or servicing agent who transmits to the purchaser
or lenders the broker's or servicing agent's own funds to cover
payments due from the borrower but unpaid as a result of a dishonored
check may recover the amount of the advances from the trust fund
when the past due payment is received.  However, this section does
not authorize the broker, servicing agent, or any other person to
issue, or to engage in any practice constituting, any guarantee or to
engage in the practice of advancing payments on behalf of the
borrower.
   (3) If the broker, directly or through an affiliate, is the
servicing agent for notes or interests sold pursuant to this section
upon which the payments due during any period of three consecutive
months in the aggregate exceed one hundred twenty-five thousand
dollars ($125,000) or the number of persons entitled to the payments
exceeds 120, the trust account or accounts of that broker or
affiliate shall be inspected by an independent certified public
accountant at no less than three-month intervals during the time the
volume is maintained.  Within 30 days after the close of the period
for which the review is made, the report of the accountant shall be
forwarded as provided in paragraph (5) of subdivision (i).  If the
broker is required to file an annual report pursuant to subdivision
(n) or Section 10232.2, the quarterly report pursuant to this
subdivision need not be filed for the last quarter of the year for
which the annual report is made.  For the purposes of this
subdivision, an affiliate of a broker is any person controlled by,
controlling, or under common control with the broker.
   (4) Unless the servicing agent will receive notice pursuant to
Section 2924b of the Civil Code, the servicing agent shall file a
request for notice of default upon any prior encumbrances and
promptly notify the purchasers or lenders of any default on the prior
encumbrances or on the note or notes subject to the servicing
agreement.
   (5) The servicing agent shall promptly forward copies of the
following to each purchaser or lender:
   (A) Any notice of trustee sale filed on behalf of the purchasers
or lenders.
   (B) Any request for reconveyance of the deed of trust received on
behalf of the purchasers or lenders.
   (k) The broker shall disclose in writing to each purchaser or
lender the material facts concerning the transaction on a disclosure
form adopted or approved by the commissioner pursuant to Section
10232.5, subject to the following:
   (1) The disclosure form shall include a description of the terms
upon which the note and deed of trust are being sold, including the
terms of the undivided interests being offered therein, including the
following:
   (A) In the case of the sale of an existing note:
   (i) The aggregate sale price of the note.
   (ii) The percent of the premium over or discount from the
principal balance plus accrued but unpaid interest.
   (iii) The effective rate of return to the purchasers if the note
is paid according to its terms.
   (iv) The name and address of the escrowholder for the transaction.

   (v) A description of, and the estimated amount of, each cost
payable by the seller in connection with the sale and a description
of, and the estimated amount of, each cost payable by the purchasers
in connection with the sale.
   (B) In the case of the origination of a note:
   (i) The name and address of the escrowholder for the transaction.

   (ii) The anticipated closing date.
   (iii) A description of, and the estimated amount of, each cost
payable by the borrower in connection with the loan and a description
of, and the estimated amount of, each cost payable by the lenders in
connection with the loan.
   (2) A copy of the written statement or information contained
therein, as required by paragraph (2) of subdivision (g), shall be
included in the disclosure form.
   (3) Any interest of the broker or affiliate in the transaction, as
described in subdivision (d), shall be included with the disclosure
form.
   (4) When the particular circumstances of a transaction make
information not specified in the disclosure form material or
essential to keep the information provided in the form from being
misleading, and the other information is known to the broker, the
other information shall also be provided by the broker.
   (l) The broker or servicing agent shall furnish any purchaser of a
note or interest, upon request, with the names and addresses of the
purchasers of the other notes or interests in the loan.
   (m) No agreement in connection with a transaction covered by this
section shall grant to the real estate broker, the servicing agent,
or any affiliate of the broker or agent the option or election to
acquire the interests of the purchasers or lenders or to acquire the
real property securing the interests.  This subdivision shall not
prohibit the broker or affiliate from acquiring the interests, with
the consent of the purchasers or lenders whose interests are being
purchased, or the property, with the consent of the purchasers or
lenders, if the consent is given at the time of the acquisition.
   (n) Each broker who conducts transactions under this section and
meets the criteria of paragraph (3) of subdivision (j) shall file
with the commissioner an annual report of a review of its trust
account.  The report shall be prepared and filed in accordance with
subdivision (a) of Section 10232.2 and the rules and procedures
thereunder of the commissioner.  That report shall cover the broker's
transactions under this section and, if the broker also meets the
threshold criteria set forth in Section 10232, the broker's
transactions subject to that section shall be included as well.
   (o) Each broker conducting transactions pursuant to this section
who meets the criteria of paragraph (3) of subdivision (j) shall file
with the commissioner a report of the transactions that is prepared
in accordance with subdivision (c) of Section 10232.2.  If the broker
also meets the threshold criteria of Section 10232, the report shall
include the transactions subject to that section as well.  This
report shall be confidential pursuant to subdivision (f) of Section
10232.2.
   (p) The jurisdiction of the Commissioner of Corporations under the
Corporate Securities Law of 1968 shall be neither limited nor
expanded by this
section.  Nothing in this section shall be construed to supersede or
restrict the application of the Corporate Securities Law of 1968.  A
transaction under this section shall not be construed to be a
transaction involving the issuance of securities subject to
authorization by the Real Estate Commissioner under subdivision (e)
of Section 25100 of the Corporations Code.
   (q) Nothing in this section shall be construed to change the
agency relationships between the parties where they exist or limit in
any manner the fiduciary duty of brokers to borrowers, lenders, and
purchasers of notes or interests in transactions subject to this
section.
  SEC. 2.  Section 10232.2 of the Business and Professions Code is
amended to read:
   10232.2.  A real estate broker who meets the criteria of
subdivision (a) of Section 10232 shall annually file the reports
referred to in subdivisions (a) and (c) with the Department of Real
Estate within 90 days after the end of the broker's fiscal year or
within any additional time  as the Real Estate Commissioner may allow
for filing for good cause:
   (a) The report of a review by a licensed California independent
public accountant of trust fund financial statements, conducted in
accordance with generally accepted accounting practices, which shall
include within its scope the following information for the fiscal
year relative to the business activities of the broker described in
subdivisions (d) and (e) of Section 10131:
   (1) The receipt and disposition of all funds of others to be
applied to the making of loans and the purchasing of promissory notes
or real property sales contracts.
   (2) The receipt and disposition of all funds of others in
connection with the servicing by the broker of the accounts of owners
of promissory notes and real property sales contracts including
installment payments and loan or contract payoffs by obligors.
   (3) A statement as of the end of the fiscal year which shall
include an itemized trust fund accounting of the broker and
confirmation that the trust funds are on deposit in an account or
accounts maintained by the broker in a financial institution.
   (b) A broker who meets the criteria of Section 10232, but who, in
carrying on the activities described in subdivisions (d) and (e) of
Section 10131, has not during a fiscal year, accepted for the benefit
of a person to whom the broker is a trustee, any payment or
remittance in a form convertible to cash by the broker, need not
comply with the provisions of subdivision (a).  In lieu thereof, the
broker shall submit to the commissioner within 30 days after the end
of the broker's fiscal year or, within any additional time as the
commissioner may allow for a filing for good cause, a notarized
statement under penalty of perjury on a form provided by the
department attesting to the fact that the broker did not receive any
trust funds in cash or convertible to cash during the fiscal year.
   (c) A report of all of the following aspects of the business
conducted by the broker while engaging in activities described in
subdivisions (d) and (e) of Section 10131 and in Section 10131.1:
   (1) Number and aggregate dollar amount of loan, trust deed sales
and real property sales contract transactions negotiated.
   (2) Number and aggregate dollar amount of promissory notes and
contracts serviced by the broker or an affiliate of the broker.
   (3) Number and aggregate dollar amount of late payment charges,
prepayment penalties and other fees or charges collected and retained
by the broker under servicing agreements with beneficiaries and
obligees.
   (4) Default and foreclosure experience in connection with
promissory notes and contracts subject to servicing agreements
between the broker and beneficiaries or obligees.
   (5) Commissions received by the broker for services performed as
agent in negotiating loans and sales of promissory notes and real
property sales contracts.
   (6) Aggregate costs and expenses as referred to in Section 10241
paid by borrowers to the broker.
   (d) The commissioner shall adopt regulations prescribing the form
and content of the report referred to in subdivision (c) with
appropriate categories to afford a better understanding of the
business conducted by the broker.
   (e) If the broker fails to file either of the reports required
under subdivisions (a) and (c) within the time permitted herein, the
commissioner may cause an examination and report to be made and may
charge the broker one and one-half times the cost of making the
examination and report.  In determining the hourly cost incurred by
the commissioner for conducting an examination and preparing the
report, the commissioner may use the estimated average hourly cost
for all department audit staff performing audits of real estate
brokers.  If a broker fails to pay the above amount within 60 days of
the mailing of a notice of billing, the commissioner may suspend the
broker's license or deny renewal of the broker's license.  The
suspension or denial shall remain in effect until the above amount is
paid or the broker's right to renew a license has expired.  The
commissioner may maintain an action for the recovery of the above
amount in any court of competent jurisdiction.
   (f) The reports referred to in subdivisions (a) and (c) are
exempted from any requirement of public disclosure by paragraph (2)
of subdivision (d) of Section 6254 of the Government Code.  The
commissioner shall annually make and file as a public record, a
composite of the annual reports and any comments thereon which are
deemed to be in the public interest.
  SEC. 3.  Section 10232.25 of the Business and Professions Code is
amended to read:
   10232.25.  (a) A real estate broker who meets the criteria of
subdivision (a) of Section 10232 shall, within 30 days after the end
of each of the first three fiscal quarters of the broker's fiscal
year, or within any additional time as the Real Estate Commissioner
may allow for good cause, file with the commissioner a trust funds
status report as of the last day of the fiscal quarter which shall
include the following:
   (1) A representation that the form and content of the trust
account records of the broker are in compliance with the regulations
of the commissioner.
   (2) A representation that the broker's trust fund bank account is
maintained in compliance with the regulations of the commissioner.
   (3) A statement of the broker's aggregate accountability for trust
funds.
   (4) A report of trust funds in the broker's custody consisting of
the trust account bank statements as of the bank's accounting date
immediately preceding the end of the fiscal quarter and a schedule of
withdrawals and deposits adjusting the account to its true balance
as of the end of the fiscal quarter.
   (5) A statement explaining any difference in amount between the
broker's total accountability under paragraph (3) above and the
adjusted trust account bank balance under paragraph (4) above.
   (b) Each report made pursuant to subdivision (a) shall include the
following:
   (1) The name, address, and position or capacity of the person who
prepared the report.
   (2) A declaration under penalty of perjury by the broker that the
information and representations in the report are true, complete, and
correct to the best of the broker's knowledge and belief.  The
declaration in a report submitted on behalf of a corporate broker
shall be signed by a broker-officer through whom the corporation is
licensed as a real estate broker and by the chief executive officer
of the corporation if he or she is not the signing broker-officer.
   (c) If a broker fails to file a report required under subdivision
(a) within the time permitted, the commissioner may cause an
examination and report to be made and may charge the broker one and
one-half times the cost of making the examination and report.  In
determining the hourly cost incurred by the commissioner for
conducting an examination and preparing the report, the commissioner
may use the estimated average hourly cost for all department audit
staff performing audits of real estate brokers.  If a broker fails to
pay the above amount within 60 days of the mailing of a notice of
billing, the commissioner may suspend the broker's license or deny
renewal of the broker's license.  The suspension or denial shall
remain in effect until the above amount is paid or the broker's right
to renew a license has expired.  The commissioner may maintain an
action for the recovery of the above amount in any court of competent
jurisdiction.
   (d) A broker who meets the criteria of Section 10232, but who, in
carrying on the activities described in subdivisions (d) and (e) of
Section 10131, did not during a fiscal quarter, accept for the
benefit of a person to whom the broker is trustee, any payment or
remittance in a form convertible to cash by the broker, need not
comply with the provisions of subdivision (a).  In lieu thereof, the
broker shall submit to the commissioner within 30 days after the end
of the fiscal quarter or within any additional time as the
commissioner may allow for good cause, a statement under penalty of
perjury on a form provided by the department attesting to the fact
that the broker did not receive any trust funds in cash or
convertible to cash during the fiscal quarter.
   (e) Any real estate broker who engages in any of the activities
specified in subdivision (d) or (e) of Section 10131, but who is not
required by this section to file trust funds status reports with the
commissioner and who is not exempt therefrom under subdivision (d),
shall complete trust funds status reports in accordance with either
(1) the requirements of subdivisions (a) and (b) applicable to trust
funds status reports filed with the commissioner, or (2) the
requirements established by the lender or note owner, if the lender
or note owner does all of the following:  (i) requires monthly
reconciliations of trust account balances; (ii) requires annual,
CPA-audited financial statements; and (iii) maintains a contractual
right to audit the trust accounts held by the broker on behalf of the
lender or note owner.
   The broker shall retain all trust funds status reports prepared
under this subdivision on file at the broker's offices, where they
shall be subject to inspection by representatives of the commissioner
upon 24 hours' notice.
  SEC. 4.  Section 10232.5 of the Business and Professions Code is
amended to read:
   10232.5.  (a) If the real estate broker is performing acts
described in subdivision (d) of Section 10131 in negotiating a loan
to be secured by a lien on real property or on a business
opportunity, the statement required to be given to the prospective
lender shall include, but shall not necessarily be limited to, the
following information:
   (1) Address or other means of identification of the real property
that is to be the security for the borrower's obligation.
   (2) Estimated fair market value of the securing property as
determined by an appraisal, a copy of which shall be provided to the
lender.  However, a lender may waive the requirement of an
independent appraisal in writing, on a case-by-case basis, in which
case, the real estate broker shall provide the broker's written
estimated fair market value of the securing property, which shall
include the objective data upon which the broker's estimate is based.

   (3) Age, size, type of construction and a description of
improvements to the property if contained in the appraisal or as
represented to the broker by the prospective borrower.
   (4) Identity, occupation, employment, income, and credit data
about the prospective borrower or borrowers as represented to the
broker by the prospective borrower or borrowers.
   (5) Terms of the promissory note to be given to the lender.
   (6) Pertinent information concerning all encumbrances which
constitute liens against the securing property and, to the extent of
actual knowledge of the broker, pertinent information about other
loans that the borrower expects or anticipates will result in a lien
being recorded against the property securing the promissory note to
be created in favor of the prospective lender.
   As used in this paragraph, actual knowledge with respect to any
anticipated or expected loan, means knowledge gained by the broker
through arranging that other loan or receipt of written notification
of that other loan.  In this regard, the broker shall also provide to
the prospective lender the option to apply to purchase a title
insurance policy or an endorsement to an existing title insurance
policy covering the securing property, and a copy of a written loan
application, and a credit report.
   (7) Provisions for servicing of the loan, if any, including
disposition of the late charge and prepayment penalty fees paid by
the borrower.
   (8) Detailed information concerning any proposed arrangement under
which the prospective lender along with persons not otherwise
associated with him or her will be joint beneficiaries or obligees.
   (9) If the solicitation is subject to the provisions of Section
10231.2, a detailed statement of the intended use and disposition of
the funds being solicited including an explanation of the nature and
extent of the benefits to be directly or indirectly derived by the
broker.
   (b) If the real estate broker is performing acts described in
subdivision (e) of Section 10131 or in Section 10131.1 in negotiating
the sale of a real property sales contract or promissory note
secured directly or collaterally by a lien on real property, the
statement required to be given to the prospective purchaser by
Section 10232.4 shall include, but shall not necessarily be limited
to, the following information:
   (1) Address or other means of identification of the real property
that is the security for the trustor's or vendee's obligation.
   (2) Estimated fair market value of the real property as determined
by an appraisal, a copy of which shall be provided to the
prospective purchaser.  However, a purchaser may waive the
requirement of an independent appraisal in writing, on a case-by-case
basis, in which case, the real estate broker shall provide the
broker's written estimated fair market value of the securing
property, which shall include the objective data upon which the
broker's estimate is based.
   (3) Age, size, type of construction and a description of
improvements to the real property if known by the broker.
   (4) Information available to the broker relative to the ability of
the trustor or vendee to meet his or her contractual obligations
under the note or contract including the trustor's or vendee's
payment history under the note or contract.
   (5) Terms of the contract or note including the principal balance
owing.
   (6) Provisions for servicing of the note or contract, if any,
including disposition of late charge, prepayment penalty or other
fees or charges paid by the trustor or vendee.
   (7) Detailed information concerning any proposed arrangement under
which the prospective purchaser along with persons not otherwise
associated with him or her will be joint beneficiaries or obligees.
In this regard, the broker shall also provide to the prospective
purchaser the option to apply to purchase a title insurance policy or
an endorsement to an existing title insurance policy covering the
real property and, if available from the seller of the note or
contract or from the original lender, a copy of a written loan
application, and a credit report.
   (8) A statement as to whether the dealer is acting as a principal
or as an agent in the transaction with the prospective purchaser.
  SEC. 5.  Section 1363 of the Civil Code is amended to read:
   1363.  (a) A common interest development shall be managed by an
association which may be incorporated or unincorporated.  The
association may be referred to as a community association.
   (b) An association, whether incorporated or unincorporated, shall
prepare a budget pursuant to Section 1365 and disclose information,
if requested, in accordance with Section 1368.
   (c) Unless the governing documents provide otherwise, and
regardless of whether the association is incorporated or
unincorporated, the association may exercise the powers granted to a
nonprofit mutual benefit corporation, as enumerated in Section 7140
of the Corporations Code, except that an unincorporated association
may not adopt or use a corporate seal or issue membership
certificates in accordance with Section 7313 of the Corporations
Code.
   The association, whether incorporated or unincorporated, may
exercise the powers granted to an association by Section 383 of the
Code of Civil Procedure and the powers granted to the association in
this title.
   (d) Meetings of the membership of the association shall be
conducted in accordance with a recognized system of parliamentary
procedure or any parliamentary procedures the association may adopt.

   (e) Notwithstanding any other provision of law, notice of meetings
of the members shall specify those matters the board intends to
present for action by the members, but, except as otherwise provided
by law, any proper matter may be presented at the meeting for action.

   (f) Members of the association shall have access to association
records in accordance with Article 3 (commencing with Section 8330)
of Chapter 13 of Part 3 of Division 2 of Title 1 of the Corporations
Code.
   (g) If an association adopts or has adopted a policy imposing any
monetary penalty, including any fee, on any association member for a
violation of the governing documents or rules of the association,
including any monetary penalty relating to the activities of a guest
or invitee of a member, the board of directors shall adopt and
distribute to each member, by personal delivery or first-class mail,
a schedule of the monetary penalties that may be assessed for those
violations, which shall be in accordance with authorization for
member discipline contained in the governing documents.  The board of
directors shall not be required to distribute any additional
schedules of monetary penalties unless there are changes from the
schedule that was adopted and distributed to the members pursuant to
this subdivision.
   (h) When the board of directors is to meet to consider or impose
discipline upon a member, the board shall notify the member in
writing, by either personal delivery or first-class mail, at least 10
days prior to the meeting.  The notification shall contain, at a
minimum, the date, time, and place of the meeting, the nature of the
alleged violation for which a member may be disciplined, and a
statement that the member has a right to attend and may address the
board at the meeting.  The board of directors of the association
shall meet in executive session if requested by the member being
disciplined.
   If the board imposes discipline on a member, the board shall
provide the member a written notification of the disciplinary action,
by either personal delivery or first-class mail, within 15 days
following the action.  A disciplinary action shall not be effective
against a member unless the board fulfills the requirements of this
subdivision.
   (i) Whenever two or more associations have consolidated any of
their functions under a joint neighborhood association or similar
organization, members of each participating association shall be
entitled to attend all meetings of the joint association other than
executive sessions, (1) shall be given reasonable opportunity for
participation in those meetings and (2) shall be entitled to the same
access to the joint association's records as they are to the
participating association's records.
   (j) Nothing in this section shall be construed to create, expand,
or reduce the authority of the board of directors of an association
to impose monetary penalties on an association member for a violation
of the governing documents or rules of the association.
  SEC. 6.  Section 2924 of the Civil Code is amended to read:
   2924.  Every transfer of an interest in property, other than in
trust, made only as a security for the performance of another act, is
to be deemed a mortgage, except when in the case of personal
property it is accompanied by actual change of possession, in which
case it is to be deemed a pledge.  Where, by a mortgage created after
July 27, 1917, of any estate in real property, other than an estate
at will or for years, less than two, or in any transfer in trust made
after July 27, 1917, of a like estate to secure the performance of
an obligation, a power of sale is conferred upon the mortgagee,
trustee, or any other person, to be exercised after a breach of the
obligation for which that mortgage or transfer is a security, the
power shall not be exercised except where the mortgage or transfer is
made pursuant to an order, judgment, or decree of a court of record,
or to secure the payment of bonds or other evidences of indebtedness
authorized or permitted to be issued by the Commissioner of
Corporations, or is made by a public utility subject to the
provisions of the Public Utilities Act, until (a) the trustee,
mortgagee, or beneficiary, or any of their authorized agents shall
first file for record, in the office of the recorder of each county
wherein the mortgaged or trust property or some part or parcel
thereof is situated, a notice of default, identifying the mortgage or
deed of trust by stating the name or names of the trustor or
trustors and giving the book and page, or instrument number, if
applicable, where the same is recorded or a description of the
mortgaged or trust property and containing a statement that a breach
of the obligation for which the mortgage or transfer in trust is
security has occurred, and setting forth the nature of each breach
actually known to the beneficiary and of his or her election to sell
or cause to be sold the property to satisfy that obligation and any
other obligation secured by the deed of trust or mortgage that is in
default, and where the default is curable pursuant to Section 2924c,
containing the statement specified in paragraph (1) of subdivision
(b) of Section 2924c; (b) not less than three months shall thereafter
elapse; and (c) after the lapse of the three months the mortgagee,
trustee or other person authorized to take the sale shall give notice
of sale, stating the time and place thereof, in the manner and for a
time not less than that set forth in Section 2924f.  In performing
acts required by this article, the trustee shall incur no liability
for any good faith error resulting from reliance on information
provided in good faith by the beneficiary regarding the nature and
the amount of the default under the secured obligation, deed of
trust, or  mortgage.  In performing the acts required by this
article, a trustee shall not be subject to Title 1.6c (commencing
with Section 1788) of Part 4.  A recital in the deed executed
pursuant to the power of sale of compliance with all requirements of
law regarding the mailing of copies of notices or the publication of
a copy of the notice of default or the personal delivery of the copy
of the notice of default or the posting of copies of the notice of
sale or the publication of a copy thereof shall constitute prima
facie evidence of compliance with these requirements and conclusive
evidence thereof in favor of bona fide purchasers and encumbrancers
for value and without notice.  The mailing, publication, and delivery
of notices as required herein, and the performance of the procedures
set forth in this article, shall constitute privileged
communications within Section 47.  There is a rebuttable presumption
that the beneficiary actually knew of all unpaid loan payments on the
obligation owed to the beneficiary and secured by the deed of trust
or mortgage subject to the notice of default.  However, the failure
to include an actually known default shall not invalidate the notice
of sale and the beneficiary shall not be precluded from asserting a
claim to this omitted default or defaults in a separate notice of
default.
  SEC. 7.  Section 2924g of the Civil Code is amended to read:
   2924g.  (a) All sales of property under the power of sale
contained in any deed of trust or mortgage shall be held in the
county where the property or some part thereof is situated, and shall
be made at auction, to the highest bidder, between the hours of 9
a.m. and 5 p.m. on any business day, Monday through Friday.
   The sale shall commence at the time and location specified in the
notice of sale.  Any postponement shall be announced at the time and
location specified in the notice of sale for commencement of the sale
or pursuant to paragraph (1) of subdivision (c).
   If the sale of more than one parcel of real property has been
scheduled for the same time and location by the same trustee, (1) any
postponement of any of the sales shall be announced at the time
published in the notice of sale, (2) the first sale shall commence at
the time published in the notice of sale or immediately after the
announcement of any postponement, and (3) each subsequent sale shall
take place as soon as possible after the preceding sale has been
completed.
   (b) When the property consists of several known lots or parcels
they shall be sold separately unless the deed of trust or mortgage
provides otherwise.  When a portion of the property is claimed by a
third person, who requires it to be sold separately, the portion
subject to the claim may be thus sold.  The trustor, if present at
the sale, may also, unless the deed of trust or mortgage otherwise
provides, direct the order in which property shall be sold, when the
property consists of several known lots or parcels which may be sold
to advantage separately, and the trustee shall follow that direction.
  After sufficient property has been sold to satisfy the indebtedness
no more can be sold.
   If the property under power of sale is in two or more counties the
public auction sale of all of the property under the power of sale
may take place in any one of the counties where the property or a
portion thereof is located.
   (c) (1) There may be a postponement of the sale proceedings at any
time prior to the completion of the sale at the discretion of the
trustee, or upon instruction by the beneficiary to the trustee that
the sale proceedings be postponed.
   There may be a maximum of three postponements of the sale
proceedings pursuant to this subdivision.  In the event that the sale
proceedings are postponed more than three times, the scheduling of
any further sale proceedings shall be preceded by the giving of a new
notice of sale in the manner prescribed by Section 2924f.
                     (2) The trustee shall postpone the sale upon the
order of any court of competent jurisdiction, or where stayed by
operation of law, or by the mutual agreement, whether oral or in
writing, of any trustor and any beneficiary or any mortgagor and any
mortgagee.  Any postponement pursuant to this paragraph shall not be
a postponement for purposes of determining the maximum number of
postponements permitted pursuant to this subdivision nor shall a
postponement resulting from the prohibition upon a sale within seven
days from the expiration of an injunction, restraining order, or stay
as provided in subdivision (d) be deemed a postponement for purposes
of this subdivision. In addition, one postponement by the trustee
based upon a reasonable belief that a petition for bankruptcy has
been filed shall not be a postponement for purposes of determining
the maximum number of postponements permitted pursuant to this
subdivision.
   (d) The notice of each postponement and the reason therefor shall
be given by public declaration by the trustee at the time and place
last appointed for sale.  A public declaration of postponement shall
also set forth the new date, time, and place of sale and the place of
sale shall be the same place as originally fixed by the trustee for
the sale.  No other notice of postponement need be given.  However,
the sale shall be conducted no sooner than on the seventh day after
the earlier of (1) dismissal of the action or (2) expiration or
termination of the injunction, restraining order, or stay (which
required postponement of the sale), whether by entry of an order by a
court of competent jurisdiction, operation of law, or otherwise,
unless the injunction, restraining order, or subsequent order
expressly directs the conduct of the sale within that seven-day
period.  For purposes of this subdivision, the seven-day period shall
not include the day on which the action is dismissed, or the day on
which the injunction, restraining order, or stay expires or is
terminated.  If the sale had been scheduled to occur, but this
subdivision precludes its conduct during that seven-day period, a new
notice of postponement shall be given if the sale had been scheduled
to occur during that seven-day period.  The trustee shall maintain
records of each postponement and the reason therefor.
   (e) Notwithstanding the time periods established under subdivision
(d),  if postponement of a sale is based on a stay granted under
Title 11 of the United States Code (Bankruptcy), the sale shall be
conducted no sooner than the expiration of the stay granted under
that title.
  SEC. 8.  Section 2943 of the Civil Code is amended to read:
   2943.  (a) As used in this section:
   (1) "Beneficiary" means a mortgagee or beneficiary of a mortgage
or deed of trust, or his or her assignees.
   (2) "Beneficiary statement" means a written statement showing:
   (A) The amount of the unpaid balance of the obligation secured by
the mortgage or deed of trust and the interest rate, together with
the total amounts, if any, of all overdue installments of either
principal or interest, or both.
   (B) The amounts of periodic payments, if any.
   (C) The date on which the obligation is due in whole or in part.
   (D) The date to which real estate taxes and special assessments
have been paid to the extent the information is known to the
beneficiary.
   (E) The amount of hazard insurance in effect and the term and
premium of that insurance to the extent the information is known to
the beneficiary.
   (F) The amount in an account, if any, maintained for the
accumulation of funds with which to pay taxes and insurance premiums.

   (G) The nature and, if known, the amount of any additional
charges, costs, or expenses paid or incurred by the beneficiary which
have become a lien on the real property involved.
   (H) Whether the obligation secured by the mortgage or deed of
trust can or may be transferred to a new borrower.
   (3) "Delivery" means depositing or causing to be deposited in the
United States mail an envelope with postage prepaid, containing a
copy of the document to be delivered, addressed to the person whose
name and address is set forth in the demand therefor.  The document
may also be transmitted by facsimile machine to the person whose name
and address is set forth in the demand therefor.
   (4) "Entitled person" means the trustor or mortgagor of, or his or
her successor in interest in, the mortgaged or trust property or any
part thereof, any beneficiary under a deed of trust, any person
having a subordinate lien or encumbrance of record thereon, the
escrowholder licensed as an agent pursuant to Division 6 (commencing
with Section 17000) of the Financial Code, or the party exempt by
virtue of Section 17006 of the Financial Code who is acting as the
escrowholder.
   (5) "Payoff demand statement" means a written statement, prepared
in response to a written demand made by an entitled person or
authorized agent, setting forth the amounts required as of the date
of preparation by the beneficiary, to fully satisfy all obligations
secured by the loan that is the subject of the payoff demand
statement.  The written statement shall include information
reasonably necessary to calculate the payoff amount on a per diem
basis for the period of time, not to exceed 30 days, during which the
per diem amount is not changed by the terms of the note.
   (b) (1) A beneficiary, or his or her authorized agent, shall,
within 21 days of the receipt of a written demand by an entitled
person or his or her authorized agent, prepare and deliver to the
person demanding it a true, correct, and complete copy of the note or
other evidence of indebtedness with any modification thereto, and a
beneficiary statement.
   (2) A request pursuant to this subdivision may be made by an
entitled person or his or her authorized agent at any time before, or
within two months after, the recording of a notice of default under
a mortgage or deed of trust, or may otherwise be made more than 30
days prior to the entry of the decree of foreclosure.
   (c) A beneficiary, or his or her authorized agent, shall, on the
written demand of an entitled person, or his or her authorized agent,
prepare and deliver a payoff demand statement to the person
demanding it within 21 days of the receipt of the demand.  However,
if the loan is subject to a recorded notice of default or a filed
complaint commencing a judicial foreclosure, the beneficiary shall
have no obligation to prepare and deliver this statement as
prescribed unless the written demand is received prior to the first
publication of a notice of sale or the notice of the first date of
sale established by a court.
   (d) (1) A beneficiary statement or payoff demand statement may be
relied upon by the entitled person or his or her authorized agent in
accordance with its terms, including with respect to the payoff
demand statement reliance for the purpose of establishing the amount
necessary to pay the obligation in full.  If the beneficiary notifies
the entitled person or his or her authorized agent of any amendment
to the statement, then the amended statement may be relied upon by
the entitled person or his or her authorized agent as provided in
this subdivision.
   (2) If notification of any amendment to the statement is not given
in writing, then a written amendment to the statement shall be
delivered to the entitled person or his or her authorized agent no
later than the next business day after notification.
   (3) Upon the dates specified in subparagraphs (A) and (B) any sums
that were due and for any reason not included in the statement or
amended statement shall continue to be recoverable by the beneficiary
as an unsecured obligation of the obligor pursuant to the terms of
the note and existing provisions of law.
   (A) If the transaction is voluntary, the entitled party or his or
her authorized agent may rely upon the statement or amended statement
upon the earlier of (i) the close of escrow, (ii) transfer of title,
or (iii) recordation of a lien.
   (B) If the loan is subject to a recorded notice of default or a
filed complaint commencing a judicial foreclosure, the entitled party
or his or her authorized agent may rely upon the statement or
amended statement upon the acceptance of the last and highest bid at
a trustee's sale or a court supervised sale.
   (e) The following provisions apply to a demand for either a
beneficiary statement or a payoff demand statement:
   (1) If an entitled person or his or her authorized agent requests
a statement pursuant to this section and does not specify a
beneficiary statement or a payoff demand statement the beneficiary
shall treat the request as a request for a payoff demand statement.
   (2) If the entitled person or the entitled person's authorized
agent includes in the written demand a specific request for a copy of
the deed of trust or mortgage, it shall be furnished with the
written statement at no additional charge.
   (3) The beneficiary may, before delivering a statement, require
reasonable proof that the person making the demand is, in fact, an
entitled person or an authorized agent of an entitled person, in
which event the beneficiary shall not be subject to the penalties of
this section until 21 days after receipt of the proof herein provided
for.  A statement in writing signed by the entitled person
appointing an authorized agent when delivered personally to the
beneficiary or delivered by registered return receipt mail shall
constitute reasonable proof as to the identity of an agent.  Similar
delivery of a policy of title insurance, preliminary report issued by
a title company, original or photographic copy of a grant deed or
certified copy of letters testamentary, guardianship, or
conservatorship shall constitute reasonable proof as to the identity
of a successor in interest, provided the person demanding a statement
is named as successor in interest in the document.
   (4) If a beneficiary for a period of 21 days after receipt of the
written demand willfully fails to prepare and deliver the statement,
he or she is liable to the entitled person for all damages which he
or she may sustain by reason of the refusal and, whether or not
actual damages are sustained, he or she shall forfeit to the entitled
person the sum of three hundred dollars ($300).  Each failure to
prepare and deliver the statement, occurring at a time when, pursuant
to this section, the beneficiary is required to prepare and deliver
the statement, creates a separate cause of action, but a judgment
awarding an entitled person a forfeiture, or damages and forfeiture,
for any failure to prepare and deliver a statement bars recovery of
damages and forfeiture for any other failure to prepare and deliver a
statement, with respect to the same obligation, in compliance with a
demand therefor made within six months before or after the demand as
to which the award was made.  For the purposes of this subdivision,
"willfully" means an intentional failure to comply with the
requirements of this section without just cause or excuse.
   (5) If the beneficiary has more than one branch, office, or other
place of business, then the demand shall be made to the branch or
office address set forth in the payment billing notice or payment
book, and the statement, unless it specifies otherwise, shall be
deemed to apply only to the unpaid balance of the single obligation
named in the request and secured by the mortgage or deed of trust
which is payable at the branch or office whose address appears on the
aforesaid billing notice or payment book.
   (6) The beneficiary may make a charge not to exceed sixty dollars
($60) for furnishing each required statement.  The provisions of this
paragraph shall not apply to mortgages or deeds of trust insured by
the Federal Housing Administrator or guaranteed by the Administrator
of Veterans Affairs.
   (f) The preparation and delivery of a beneficiary statement or a
payoff demand statement pursuant to this section shall not change a
date of sale established pursuant to Section 2924g.
  SEC. 9.  Section 17312 of the Financial Code is amended to read:
   17312.  (a) Each person licensed pursuant to this division who is
engaged in the business of receiving escrows specified in subdivision
(c) shall participate as a member in Fidelity Corporation in
accordance with this chapter and rules established by the board of
directors of Fidelity Corporation.  Fidelity Corporation shall not
deny membership to any escrow agent holding a valid unrevoked license
under the Escrow Law who is required to be a member under this
subdivision.
   (b) Upon filing a new application for licensure as required by
subdivision (b) of Section 17213, persons required to be a member of
Fidelity Corporation shall file a copy thereof concurrently with
Fidelity Corporation, but no additional membership fee or deposit
shall be required.
   (c) The required membership in Fidelity Corporation shall be
limited to those licensees who engage, in whole or in part, in the
business of receiving escrows for deposit or delivery in the
following types of transactions:
   (1) Real property escrows, including, but not limited to, the
sale, encumbrance, lease, exchange, or transfer of title, and loans
or other obligations to be secured by a lien upon real property.
   (2) Bulk sale escrows, including, but not limited to, the sale or
transfer of title to a business entity and the transfer of liquor
licenses or other types of business licenses or permits.
   (3) Fund or joint control escrows, including, but not limited to,
transactions specified in Section 17005.1, and contracts specified in
Section 10263 of the Public Contract Code.
   (4) The sale, transfer of title, or refinance escrows for
manufactured homes or mobilehomes.
   (5) Reservation deposits required under Article 2 (commencing with
Section 11010) of Chapter 1 of Part 2 of Division 4 of the Business
and Professions Code or by regulation of the Department of Real
Estate to be held in an escrow account.
   (6) Escrows for sale, transfer, modification, assignment, or
hypothecation of promissory notes secured by deeds of trust.
   (d) Coverage required to be provided by Fidelity Corporation under
this chapter shall be provided to members only for loss of trust
obligations with respect to those types of transactions specified in
subdivision (c).  Indemnity coverage for those types of transactions
not specified in subdivision (c) shall be provided by escrow agents
in accordance with Section 17203.1.
  SEC. 10.  Section 17320 of the Financial Code is amended to read:
   17320.  Fidelity Corporation shall establish and maintain the
following funds for payment of claims and for payment of costs of
administration:  the membership fund, the operations fund, and the
fidelity fund.
   (a) An applicant or a licensee shall, at the time an application
is filed for a license, pay to Fidelity Corporation a membership fee
of three thousand dollars ($3,000) for each location for which a
license is applied.  If the application is denied, withdrawn, or
abandoned, Fidelity Corporation may retain two hundred dollars ($200)
from the membership fee to cover costs of administration.
   (1) The membership fund shall be reserved for payment of claims
which exceed the fidelity fund balance and for payment of
extraordinary operational costs.
   (2) Any member who, on the effective date of this section, has an
account balance which exceeds the three thousand dollars ($3,000)
membership fee times the number of its licensed locations shall be
credited in a special reserve account for the excess amount.  This
balance shall be credited against future assessments made pursuant to
subdivision (b) of Section 17321 in an amount not exceeding four
hundred dollars ($400) per licensed location per year.  Any member
whose account balance is less than three thousand dollars ($3,000)
times the number of its licensed locations shall, on or before
December 1, 1988, pay to Fidelity Corporation an amount sufficient to
allow the member's account to be maintained at three thousand
dollars ($3,000) times the number of licensed locations.  Fidelity
Corporation shall provide each member with an accounting of the
amounts being reserved for the members' membership account and
amounts being held as a special reserve.
   (3) The membership fee, less any unpaid assessments and related
costs, shall be refunded to the member in accordance with Fidelity
Corporation's bylaws not less than 30 months and no more than 36
months after the effective date of surrender of a license.
   (4) Any member who does not engage in any escrow transactions
pursuant  to subdivision (c) of Section 17312 may terminate its
membership in Fidelity Corporation by written notice to Fidelity
Corporation and the Department of Corporations, as provided in the
Fidelity Corporation's bylaws and rules and regulations.  The
membership fee, less any unpaid assessments and related costs, shall
be refunded to the member in accordance with Fidelity Corporation's
bylaws not less than 30 months and no more than 36 months after the
effective date of the member's written request to terminate its
membership in Fidelity Corporation. Before a licensee resumes those
escrow transactions, it shall first be required to become a member of
Fidelity Corporation, as provided in this subdivision.
   (b) Fidelity Corporation shall prepare, prior to its fiscal year
end, an estimated annual operational budget projecting the costs of
operations and administration for the succeeding fiscal year,
excluding the amount paid for claims and premiums paid for excess
coverage bonding.  The amount of the assessment shall be 150 percent
of the budgetary projection.  In succeeding years, the assessment
shall be adjusted by adding the prior year's deficit or deducting
unused surplus from the prior year.
   (c) Fidelity Corporation shall establish a fidelity fund for the
payment of claims and for the payment of the premium for the fidelity
bond or insurance policy, if any.  All claims shall be paid from the
fidelity fund, provided that, to the extent that the fidelity fund
balance is not sufficient to pay claims, the claim shall be paid from
the membership fund by charging each member's membership account a
pro rata share of the excess.
   (d) All interest earned on the membership fund and the operations
fund shall be credited to the fidelity fund.
  SEC. 11.  No reimbursement is required by this act pursuant to
Section 6 of Article XIIIB of the California Constitution because the
only costs that may be incurred by a local agency or school district
will be incurred because this act creates a new crime or infraction,
eliminates a crime or infraction, or changes the penalty for a crime
or infraction, within the meaning of Section 17556 of the Government
Code, or changes the definition of a crime within the meaning of
Section 6 of Article XIIIB of the California Constitution.
